Updated
GL-M-07
01 / In 30 seconds
The short answer
- What LTV is
- The share of the property’s value that the bank is prepared to finance with a loan
- How to read it
- An LTV of 60% means the bank lends 60% and your down payment is 40%
- For non-residents
- Terms are usually stricter: lower LTV, higher rate, more documents
- What the bank checks
- Income, the source of the down payment, the property as security
- Critical for programmes
- Many programmes require the investment to be made with own funds, without a loan
02 / In plain words
What Mortgage / LTV means
LTV (loan-to-value) is a ratio that shows what share of a property’s value the bank is prepared to finance. If the LTV is 60%, the bank lends 60% of the price and you pay the remaining 40% yourself. The lower the LTV, the more money you need at the outset.
For a foreign non-resident buyer the terms are almost always stricter than for locals: a lower share of financing, a higher rate and more document requirements. The bank looks at confirmed income, the source of the down payment and the property itself as security — it will not finance an illiquid property.
The key point for immigration programmes: many of them require the investment to be made with own funds. A mortgage may not count at all, may count only to the extent of the own contribution, or may be allowed above the minimum investment amount. The rule is checked before applying for the loan, not after.
A case from practice
A buyer expected to cover part of the investment with a loan, but under the programme’s conditions only own funds counted. The deal structure was rebuilt before filing — otherwise the investment would not have been recognised.
When a mortgage is considered
- Buying a property above the available budget
- Keeping capital free
- A buy-to-let investment
- Buying with income in another currency
- Acquiring a second property
- Refinancing an existing loan
03 / What it covers
What the bank assesses
Borrower
- Evidenced income
- Credit history
- Residence status
Money
- Source of the down payment
- Debt burden
- Currency of income and loan
Property
- Valuation
- Liquidity
- Type and condition
Conditions
- Maximum LTV
- Rate and term
- Fees and insurance
04 / How it works
How the process goes
Check the programme’s conditions
Preliminary approval from the bank
Valuation of the property
Approval and signing
Registration of the charge and the deal
05 / Key facts
What you need to know
01
For non-residents LTV is usually lower and the rate higher
02
The bank checks the source of the down payment
03
Currency risk arises when income is in another currency
04
The property is charged as security until the loan is fully repaid
05
Many programmes require the investment to be made with own funds
Common mistakes
- Planning a programme investment funded by a loan without checking the conditions
- Not taking currency risk into account when income is in another currency
- Forgetting fees, insurance and valuation
- Applying for a loan without preliminary approval
- Not checking the consequences of early repayment
06 / Expert advice
How to prepare in advance
The first thing to check is whether your programme allows mortgage financing and to what extent. Then obtain preliminary approval from the bank before signing the contract for the property — otherwise there is a risk of losing the deposit if the bank refuses. And calculate the full cost of the loan: rate, fees, insurance, valuation and currency risk.
What we do for you. We always check the financing arrangement against the programme’s requirements before you go to the bank. A mortgage is a working tool, but in investment immigration it counts far from always.
Robert HaasHead of Company Formation
07 / Questions
Frequently asked questions
The share of the property’s value that the bank finances. An LTV of 60% means the bank provides 60% and you pay 40%.
In many countries, yes, but on stricter terms: a lower share of financing, a higher rate and more document requirements.
Often not, or only partly. Many programmes require own funds. This is checked before applying for the loan.
Confirmed income, credit history, the source of the down payment and the property itself as security.
A situation where your income is in one currency and the loan payments in another. A change in the exchange rate can noticeably increase the burden.
Before signing the contract for the property — for preliminary approval. Otherwise, if the bank refuses, there is a risk of losing the deposit.
Related terms
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